No single wellness benefit drives retention, but taken holistically, wellness benefits show your company cares. And that does drive retention.
As Forbes pointed out at the beginning of the year, the biggest concern for business leaders in 2017 is retaining employees in an increasingly competitive talent marketplace. To understand why a whopping 87% of employers say improving retention is a critical priority for them this year, consider the following:
- Unemployment rate is down to 4.6% and employee salaries are projected to grow by 3% (SHRM)
- Over half of employees now believe that if they lost their job they would be able to find a comparable one within six months (Glassdoor)
- The average cost to an employee per new employee hire is $4,129, while the average time it takes to fill a given position is 42 days. (SHRM)
- More employees are testing out their value in the current job market by interviewing outside of work hours, asking for higher salaries and promotions, and researching pay grades in their industry. (Forbes)
In short, companies small and large must foot a huge employee replacement bill if they are unable to retain their employees. As the economy continues to strengthen and employees have more job options, employers must focus more than ever on tactics to ensure retention. One tactic that has seen a big jump in popularity in the past few years: expanding your company’s compensation package to include a robust range of wellness benefits, particularly financial wellness. And with so much at stake, it’s understandable that employers expect wellness benefit providers to demonstrate that their respective product directly improves retention. A common attitude: “Unless my employees tell me that this benefit will increase their probability of retention, it’s ancillary at best.”
Unfortunately, this attitude is short-sighted and narrow in its understanding of the role of wellness benefits in driving retention. To fully grasp the return on investment of wellness programs, we need to broaden our interpretations of ROI. As Jim Purcell writes in Harvard Business Review:
- Employees with high overall “well-being” have 41% lower health-related costs compared with employees who are struggling and 62% lower costs compared with employees who are suffering.” (Gallup State of the American Workplace study)
- More employers enjoy major financial returns and competitive advantages through higher employee engagement, productivity, and workplace morale. (Willis, Towers, Perrin)
- When workplace wellness is viewed holistically without ignoring or undervaluing the total return on wellness beyond reduced claim expenses, companies can expect reduced absenteeism and presenteeism, greater employee engagement and productivity, less unscheduled paid time off, fewer workers’ comp claims, greater employee retention, increased employee satisfaction and morale, and demonstrable competitive advantage.
At SUM180, we are naturally very interested in just how strong a role benefits play in retention. The results of a recent SUM180 Twitter poll (n=658), suggest, at first glance, that it’s not very strong. According to our poll, the issue at work most likely to push an employee to start looking for a new position is “feeling undervalued” (35%). “Lack of strong benefits” was dead last.
Does this poll mean that wellness benefits do not, after all, support retention? Not at all. Bear in mind Jim Purcell’s research, and consider that retention is about feeling valued and having a strong, empowering company culture. It involves leveraging the social aspect of work. We know, for example, that when employees witness firsthand how their contribution benefits customers, they become more motivated and productive. Why? Because every employee wants to make an impact. Our employees want to feel like more than an anonymous cog in a machine; they want to feel connected to a bigger picture. They want their work to have meaning and human context.
Similarly, employees want appreciation from their employers. They want recognition not just as engines of productivity, but as individuals, with unique strengths and weaknesses – and issues that need help. Robust wellness benefits support the message that you care as an employer, and that you are trying to help. A caring management increases employees’ sense of belonging. This increases engagement, and engagement drives retention. The ROI from engagement and retention is how companies will be able to justify wellness benefits for years to come.
“Given the absence of other alternatives, it’s time to correct course and double down on workplace wellness. When done right, workplace wellness offers both near- and long-term financial and competitive returns and provides an alternative to the toxic, zero-sum game of reducing health coverage and increasing employee insurance costs. This is an opportunity that cannot be missed.”